W ORLD E CONOMIC O UTLOOK October 2017 Research Department, International Monetary Fund
Global activity has gained further momentum Global growth picked up further in 2017H1; outlook is for higher annual growth in 2017 and 2018 • – Advanced Economies (AE): stronger cyclical recovery in near term, subdued potential growth in medium term – Emerging Market and Developing Economies (EMDE): activity in stressed economies bottoming out, commodity importers generally projected to maintain high growth rates Inflation remains subdued • Risks skewed to the downside in the medium term • Policy priorities: macroeconomic management needs vary; common goal is to boost potential growth • 1
Forces shaping the outlook Advanced economies Emerging market and developing economies Ongoing forces… Cyclical rebound; varying degrees of Rebalancing in China • • post-crisis repair Adjustment to lower commodity prices • Geopolitical and political factors • …overlaid on… Demographic headwinds Demographic trends • • • Weak productivity growth 2
Growth projections: Advanced economies (percent change from a year earlier) Other Advanced Advanced World Economies U.S. U.K. Japan Euro Area Germany Canada Asia 2016 3.2 1.7 1.5 1.8 1.0 1.8 1.9 1.5 2.4 2017 3.6 2.2 2.2 1.7 1.5 2.1 2.0 3.0 2.6 Revision 0.1 0.2 –0.1 –0.3 0.3 0.4 0.4 1.1 0.1 from Apr. 2017 2018 3.7 2.0 2.3 1.5 0.7 1.9 1.8 2.1 2.7 Revision 0.1 0.0 –0.2 0.0 0.1 0.3 0.3 0.1 0.1 from Apr. 2017 3 Sources: IMF, World Economic Outlook April 2017 Update; and IMF, World Economic Outlook October 2017.
Growth projections: Emerging markets and LIDCs (percent change from a year earlier) Emerging Market and Commodity Low Income Developing Exporting Developing World China India Brazil Russia Economies Economies Countries 2016 3.2 4.3 6.7 7.1 –3.6 –0.2 1.5 3.6 2017 3.6 4.6 6.8 6.7 0.7 1.8 2.3 4.6 Revision from 0.1 0.1 0.2 –0.5 0.5 0.4 0.1 –0.1 Apr. 2017 2018 3.7 4.9 6.5 7.4 1.5 1.6 2.9 5.2 Revision from 0.1 0.1 0.3 –0.3 –0.2 0.2 0.0 –0.1 Apr. 2017 Sources: IMF, World Economic Outlook April 2017 Update; and IMF, World Economic Outlook October 2017 4
Recovery “falls short” in a few areas Underlying inflation remains below target in AE • Medium term growth projections in AE and commodity-exporting EMDE • fall short of past averages In over ¼ of EMDE, real per capita GDP is not projected to converge • toward AE levels over 2017-22 5
Headline inflation has softened; core inflation remains subdued Emerging Market and Developing Economies Advanced Economies (three-month moving average; annualized percent change) (three-month moving average; annualized percent change) Core consumer price index inflation Consumer price inflation 3 7 2 6 5 1 0 4 -1 3 -2 2 2013 14 15 16 Jul. 2013 14 15 16 Jul. 17 17 6 Source: IMF staff calculations.
Per capita real GDP growth set to remain below past averages in AE and commodity (especially fuel) exporters Emerging Market and Developing Economies, by Region Per Capita Real GDP Growth across (percent) Country Groups (percent) 1995-2005 2006-16 2017-22 10 1995-2005 2006-16 2017-22 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5 -6 LAC MENAP EMDE EMDE SSA CIS AEs EMDEs China Fuel Nonfuel Asia Europe excl. excl. China 7 China Source and notes: IMF staff calculations. Medians are shown by red dots.
Risks skewed to the downside over the medium term Financial tensions • Financial stability risks in China o A potential tightening of global financial conditions o Risks of capital flow reversals o Challenges facing euro area banks o Financial deregulation o Threats to global economic integration • Persistently low inflation in advanced economies • Non-economic factors • 8
Policy priorities: undertake structural reforms to improve medium-term growth outlook and reduce risks Advanced economies Emerging market and developing economies Cyclical support desirable where Support for rebalancing and tame credit • • demand and inflation are weak growth in China Boost potential output and strengthen Adjustment to lower commodity revenues • • safety nets in exporters Credible strategies needed to put debt Contain financial risks in vulnerable EMDEs • • on a sustainable path Structural reforms to boost potential output • 9
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